Monopoly Investigation of Apple Widens: Report

The US Department of Justice's probe into Apple's business practices is expanding beyond how the company deals with record companies, according to a report in the New York Post picked up by Boy Genius Report today. Several sources quoted by the NYC tabloid claim that the Justice Department has contacted other big media and technology companies to ask about Apple's way of doing business. The probe marks an ironic twist to Apple's success story, where after years of being a marginalized outsider the company now stands accused of similar monopolistic practices it often decried in competitors like Microsoft and IBM.

The Department of Justice was known to have begun an investigation into how Apple deals with music labels around iTunes. In particular, one complaint that the company was pressuring labels not to participate in Amazon's "MP3 Daily Deal," a promotion in which Amazon got exclusive access to new tracks, had come under intense scrutiny. The new report indicates, however, that the DoJ is looking to many more of Apple's business partners, including film studios. "The [Justice Dept.] is doing outreach," one Hollywood industry source contacted by the Post claims, adding that Apple "can't dictate terms to the [film] industry." Referring to controversies following Apple's rejection of Flash on its mobile devices, the source said that the "Adobe thing is just inviting the wrath of everybody."

What the Post called a "senior source at a media company" had a pointed warning for Steve Jobs: "If Apple thinks it's going to increase its monopoly with the iPad, it should look at the history of other walled gardens." The term "walled garden" has often been used to describe the unjailbroken iPhone OS platform, where Apple controls access to what apps and services are available on the device. It's unclear what the unnamed source was referring to specifically, but one example of such a "walled garden" would be America Online, which allowed access to certain internet services in the US through a proprietary portal. Though the service was an early introduction for many non-technical users to the Internet, and grew through the 90s to a userbase of over 25 million subscribers, but plummeted as low-cost access to the internet and a wide array of offerings on the Web spread.

Apple's rapid growth - the company now surpasses Microsoft in market capitalization - combined with its often "my-way-or-the-highway" partnership negotiation style pretty much guaranteed that they would face challenges. As the government learned when it took on Microsoft over ten years ago, though, finishing an anti-trust case is fraught with difficulty. Expect years of negotiations, lawsuits and counter-lawsuits, followed by a settlement that satisfies nobody and Apple being overshadowed by whatever new technology innovators emerge in the 2020s.